Allocation Models

Allocation models can be created to present possible asset allocation strategies for clients. Diversifying investments by asset categories can offset the fluctuations of the performance of the total portfolio.

Besides offering models, OIPA supports the use of funds through allocation configuration. Both options can be configured for use in OIPA at the same time. The presence of the configuration for both funds and models will indicate to OIPA that both should be offered.

Configuring Models

Refer to the section Configure Allocations Using Models for step by step instructions on configuring models. An XMLexample is also provided to demonstrate the elements needed to configure models.

Types of Allocation Models

OIPA supports two types of allocation models: Asset Class and Non-Asset Class. Both of these models can be set up to be edited or can be locked down.

  • Non-Editable Non Asset Class Models are locked down models that do not have asset class information available. The characteristics of this model are as follows:
    • funds are explicitly defined.
    • individual allocation percentages for each fund is fixed
    • asset class is not available.
  • Non-Editable Asset Class Modelsarethe most common asset allocation model used. These models are locked down models that will not be editable at any hierarchical level. Insurance companies or their advisors pre-determine the asset classes and their allocation percentages as well as the funds within each asset class and the corresponding percentages based on target risk profile and fund performances. The characteristics of this model are as follows:

    • Funds are explicitly defined for each asset class

    • individual allocation percentages of each fund are fixed
    • asset class percentages are fixed.
  • Editable Non-Asset Class Models are flexible models with a pre-selected array of funds. During allocation, the user selects the funds within the model and the amount allocated to each fund. The characteristics of this model is as follows:

    • funds in the model are explicitly defined

    • individual allocation percentages of each fund can be changed.
    • allocation percentage can be set-up at a default value.
  • Editable Asset Class Models have editable allocation of funds within asset class. The characteristics of this model are as follows:
    • total funds in the model are explicitly defined for each asset class
    • asset class allocation percent is fixed
    • within each asset class, individual allocation percentages of funds are editable
    • the allocation percentage could be set to a default value.